Create a category column or a table for each category?

Which is better?

Table: Words
Columns: ID, Word, ParentWordID, CatID

Table: Categories
Columns: CatID, Category

Or:

Table: Words
Columns: ID, Word

Table: Categories
Columns: CatID, Categories

Table: Cat1
Columns: WordID
...
Table: CatN
Columns: WordID

One possible advantage for the 2nd option is that not all

need to have a

. But the same could be said for

, which is empty most of the time. Maybe that too could be replaced with a

table and a table for each

?